Mortgages have fallen to their most affordable level for eight years, figures for October published yesterday by Council of Mortgage Lenders have revealed. Record low interest rates are the main reason, the CML said.

The amount of deposit needed by first-time buyers has remained stable in recent months, at an average of 20 per cent, but monthly interest payments have fallen and are now typically 12.3 per cent of income. That is their lowest level since January 2004.

A year ago the proportion of income spent on interest payments by first-time buyers was 13.3 per cent. However the number of first-time buyers is still falling, down 10 per cent over the month, from 18,000 to 16,400 in October.

Paul Smee, CML director general, said: "Despite the fall in lending in October, it is possible that we will see signs of increased activity by first-time buyers in the early months of next year, as we approach the end of the government's stamp duty concession at the end of March.

"The underlying picture of the market overall, however, is level, albeit at low levels of lending activity."